Well, the problem with his logic, and most of the industry whining about piracy and such, is simply that the gaming industry as a whole is making billions of dollars. Piracy and used game sales can at best be looked at as potential lost sales, but don't represent any real loss to the massive truckloads of cash still being made by successful games.
Now of course in any industry there are going to be failures, movies tank, TV shows tank, music tanks, it's common for the entertainment industry, and the gaming industry is producing a LOT of material and as a result your going to see a decent number of failures. Especially when your looking at an increasingly "grindhouse" mentality where game companies want to put out constant streams of games, obviously that means a lot of trash is going to be developed. I mean heck, how many games is EA currently flooding the market with? Dead Space 2, The Sims Medieval, Dragon Age 2, Darkspore, oh yeah and "Old Republic Online"... that's all right now. We have more games coming out later this year, and I'm probably forgetting some. With that kind of grindhouse releasing, it's unreasonable for them, or anyone, to expect all those games to be successful and profitable. Heck, they even have developers famous for slow, high quality development, like "Bioware" juggling multiple products to spam the market.
I think gloom and doom predictions about the game industry are based on a combination of factors. One is simply that the profits are not meeting the increasingly rising expectations of the game producers. It's not so much about making money, or even a LOT of money, it's a matter of making more money than anything else ever seen before in the industry. Something like "Black Ops." gets released and the entire industry is so detached from reality where they begin to see anything that is not successful on the same level as somehow being a failure. It's sort of like people implying that the PSP is a failure just because the DS outperformed it, it still moved huge numbers of units, and made a lot of money, by any objective standards it's a successful product.
I also think the whole "change of format" thing is a matter of wishful thinking on the part of the industry. Simply put there is a lot of money to be made by cutting out packaging and distribution, all of which the industry wants to pocket. The cost to doing this is to the consumers giving up what control they already have over what they buy. It really doesn't benefit the end user at all, and despite hyping it heavily, I think the industry is increasingly getting upset that this technology and infrastructure they are investing in, is not attracting lemming-like consumers at the rate they hoped.
Things like used games don't just "cost them sales" they also represent one of the barriers to the digital technology, because part of the value of a game is to defer the cost by selling it used.
Things like DRM, and "Day one DLC" to encourage the purchuse of new games are actually annoying consumers, and discouragng a lot of people to not buy gams. The industry winds up putting out DRM to prevent piracy, but then losing the sales (perhaps to pirates) because people don't want spyware on their system, or to periodically have their usage tracked through their internet.
What's more don't for a second doubt that the DRM itself is also a big part of the business, not only are the companies making DRM selling it (and now attached by the hips to the industry, since they rely on game companies buying and using it), but anyone who thinks that the gaming industry doesn't wind up using this information to "track usage" and cut advertising and research costs, but they probably sell that data to other companies despite what they might claim, and probably make a lot of money doing so. Basically the industry looks at all the money to be made by going through people's computers, and then gets touchy when people don't go along with it, and counts that money as a loss.... you know, the billions of dollars of potential revenue they could have on top of the billions they actually made.
The gaming industry isn't in trouble, so much as the gaming industry as we know it now is probably in trouble. Games will never go away, there is a market for decent games, and that will not change. On the other hand the big bussiness aspects of gaming might very well change as they collapse under the weight of their own demands and expectations. Any upheaval is likely to be annoying to us gamers, but ultimatly temporary, and a few years later we probably won't actually notice when it comes to buying and playing our games.
Also, the global economy is changing, and nobody wants to spend the blood to change that at the moment. There are only so many resources on the planet, and simply put the rise of nations like China means more resources are going to them, which means they are coming from the other big countries like the US. As time goes on, you start to see other nations feeling the crunch too as their resources are slowly drained away. The bottom line is that while there is an increasingly higher standard of living (even if not noticable to luxury industries) among those who were heavily impoverished in places like China, and less money
in the pockets of the people who were buying luxury entertainment items like games on average. The nature of the rise in these other places are is that the people being better off does not make them well off enough to become video game consumers, especially given how rife piracy is in those regions to begin with. Even someone with more money in China is not likely to pay top dollar to get a game legitimatly when (as articles, even here on The Escapist if I remember) when they can just go get a pirate copy for a fraction of the cost.
The result is that less money to spend on games, means that the industry is going to have to tighten it's belt, as opposed to looking at how much more it can grab. The industry doesn't have to die, or reduce the quality of games, rather it has to accept that it's not going to be able to measure it's progress in terms of progressive growth, or be expecting crazy profits to come rolling in. Right now your looking at an industry that is both spoiled and has it's expectations warped by the current monster successes of things like the modern "Call Of Duty" franchises.
That's my thoughts at least. I think any upheaval for us as consumers will be temporary no matter what anyone says... but yeah, I think if things continue this way we might very well be seeing a massive reality check for the big gaming businesses and a lot of the ones that don't adapt to having to lower their expectations on returns and such destroying themselves.
